U.S. Stocks See Mixed Trading Amid Economic Concerns and Tariff Deadline
U.S. stocks are showing mixed results in early Monday trading, reflecting investor uncertainty amid fresh concerns about the health of the U.S. economy and the looming deadline for President Donald Trump’s latest round of tariffs. The S&P 500 is down 0.2%, while the Dow Jones Industrial Average is up slightly, gaining just 3 points, or less than 0.1%, as of mid-morning. The Nasdaq composite is also lower, falling 0.4%. This volatility follows a tumultuous few weeks for Wall Street, which saw the S&P 500 reach a record high after strong corporate earnings reports, only to drop sharply as weaker-than-expected economic data began to surface. Among the concerning reports, U.S. households have grown increasingly pessimistic about inflation, likely due to the uncertainty caused by Trump’s tariff policies.
The latest data point came Monday morning, with the release of the U.S. manufacturing report, which showed less strength than economists had anticipated. While manufacturing activity is still growing, it is not expanding as quickly as forecast. Even more troubling, new orders are contracting, signaling a potential slowdown in the sector. At the same time, prices are rising, likely due to the ongoing trade tensions and the impact of tariffs. Timothy Fiore, chair of the Institute for Supply Management’s manufacturing business survey committee, noted that manufacturers are grappling with the operational challenges of the new tariff policy, including reduced demand, stable production, and ongoing staff reductions.
Tariffs Loom Large as a Source of Economic Uncertainty
President Trump’s tariffs on imports from Canada, Mexico, and China are set to go into effect Tuesday, but there is a sense of cautious optimism on Wall Street. Historically, Trump has shown a willingness to delay or reverse course on his tariff announcements at the last minute. Just a month ago, he postponed the implementation of tariffs on imports from Canada and Mexico. Investors are holding onto the hope that Trump is using the threat of tariffs as a negotiating tactic, aiming for policies that will do less harm to the global economy. However, the prolonged uncertainty is taking a toll on businesses and consumers alike. The tariffs could further exacerbate inflation, which has already proven stubbornly high despite efforts to bring it under control.
The recent market downturn has been particularly challenging for high-flying tech stocks like Nvidia, which fell 4.4% Monday. However, not all tech stocks were hit hard; Tesla, led by Elon Musk, saw a 1.9% gain. Other notable moves in early trading included a 1.5% drop for Kroger, the grocery chain, after the resignation of its Chairman and CEO, Rodney McMullen, following an internal investigation into his personal conduct.
Cryptocurrency Stocks See Gains Amid Regulatory Clarity
In a positive development for the cryptocurrency sector, stocks of companies tied to the digital asset economy saw gains Monday after President Trump announced over the weekend that his administration is moving forward with a crypto strategic reserve. MicroStrategy, a company known for its significant Bitcoin holdings, rose 5.9%, while Coinbase, the popular crypto trading platform, gained 3.6%. This news provided a much-needed boost to a sector that has faced significant regulatory uncertainty and market volatility.
Retail Earnings and Consumer Spending in the Spotlight
Tuesday is shaping up to be a pivotal day for the markets, with not only new tariffs potentially taking effect but also earnings reports from several major U.S. retailers, including Target, Best Buy, Ross Stores, and AutoZone. These reports are always highly anticipated, as they provide valuable insights into the health of U.S. consumer spending, which remains the primary driver of the world’s largest economy. However, this time around, there is added importance given recent data suggesting that U.S. households may already be adjusting their behavior in anticipation of further tariff-related price increases.
Global Markets React to Trade Tensions and Economic Data
The impact of the U.S.-China trade war is being felt across the globe, with manufacturers in China also reporting an uptick in orders as importers rush to beat higher U.S. tariffs. Meanwhile, Chinese state media has reported that Beijing is considering retaliatory measures against the U.S. On the other side of the Pacific, European markets are surging, with Germany’s DAX jumping 2.5% and France’s CAC 40 rising 1.2%. This rally comes on the heels of a report showing easing inflation in February, which could pave the way for further interest rate cuts by the European Central Bank later this week.
In a notable debut, shares of Mixue Bingcheng, a Chinese bubble tea chain, soared 43% on its first day of trading in Hong Kong. The company, which claims to be the world’s largest food retail chain with over 45,000 outlets, saw its stock jump as the broader Hang Seng index rose 0.3%. Elsewhere in Asia, Tokyo’s Nikkei also saw gains. Despite the strong performance of global markets, U.S. stocks have lagged this year, even as President Trump continues to tout his “America First” policies.
Bond Market Reflects Economic Slowdown Fears
In the bond market, the yield on the 10-year Treasury dropped to 4.19% from 4.24% just before the manufacturing report’s release. This continues a sharp decline since January, when the yield was approaching 4.80%. Falling Treasury yields often provide a boost to stock prices by making borrowing cheaper, but Morgan Stanley strategists led by Michael Wilson caution that this time, the decline is driven by fears of slower economic growth. As a result, the usual positive correlation between bond yields and equities may not hold, signaling a more challenging environment for investors in the months ahead.
AP Business Writers Matt Ott and Elaine Kurtenbach contributed to this report.
